Trade secrets may be anything from a secret recipe for a world-famous muffin to a proprietary process for minimizing the cost of assembling an automobile engine. Often, these secrets are key to the success of a business, and losing exclusivity can damage profitability or even end a successful business. Yet, keeping the secret can be difficult, when various employees, licensees, auditors, and others are privy to all or part of the information.
Protecting trade secrets is particularly daunting when you consider that the most common source of intellectual property theft is insiders: employees, contractors, partners, and others to whom your company has voluntarily entrusted information.
The Uniform Trade Secrets Act and State Law
Most states have adopted the Uniform Trade Secrets Act (UTSA) or enacted a similar statute. The specific details may vary somewhat from state to state, so it is important to get guidance from an experienced intellectual property lawyer who is familiar with the laws in your state.
What is a Trade Secret?
Not every bit of information a company would prefer to keep to itself is a trade secret. The UTSA defines a trade secret as:
“…information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
(i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and
(ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
In short, information that is valuable at least in part because it is secret, and which the company makes a reasonable effort to keep secret. The second element is an important one that is sometimes overlooked by companies with trade secrets to protect.
Reasonable Efforts to Maintain Secrecy
Some companies lose trade secret protection because they fail to make reasonable efforts to protect the information in question. There is no clear statutory standard as to what type of efforts are required. However, a thorough knowledge of precedent in trade secret litigation allows an experienced intellectual property attorney to work with a company to devise a multi-faceted trade secret protection plan.
Given the high incidence of insider theft of trade secrets, well-formulated non-disclosure agreements with employees, contractors, partners, and others granted access to trade secrets is paramount. However, more is generally required. Some other common steps include:
- Physical security measures, such as keeping secret documents under lock and key, requiring entry of a code to access the information or even issuing electronic passkeys that allow management to see who has accessed the information and when
- Electronic security measures, such as password protection of files containing trade secrets
- Providing employees and contractors with clear policies and procedures regarding the handling of trade secrets and ensuring that they have an adequate understanding of those policies and procedures
- Assigning responsibility for maintaining, monitoring, and enforcing such policies to a specific individual or team
- Reviewing and assessing procedures on an ongoing basis to identify and correct vulnerabilities
The Federal Defend Trade Secrets Act of 2016
New federal legislation that took effect in 2016 provides federal civil remedies for theft of trade secrets for the first time. When trade secret litigation is on the horizon, our experienced trade secret attorneys will explain the differences between the applicable state and federal statutes and help you decide which remedies are best suited to your situation.
Get Help with Your Trade Secret Protection Plan
The measures required to adequately protect trade secrets may seem daunting, but a seasoned intellectual property lawyer can guide you through the process of establishing policies and procedures, create effective non-disclosure agreements for your employees, contractors and partners, and assist you in implementing a system of ongoing monitoring and adjustment.
You cannot afford to take a chance with the trade secrets that are the basis for your company’s profitability. Make the investment in protecting the future of your business.
KPPB LAW Can Help
Whether you are just creating a plan to protect your company’s trade secrets or have been the victim of trade secret theft and are contemplating litigation, KPPB can help. Our experienced intellectual property attorneys are prepared to guide your company through every area of trade secret law, including:
- Identification of protectable secrets
- Creation of procedures to protect those secrets and to fulfill the reasonable efforts requirement
- Prosecution of trade secret litigation
Contact KPPB LAW for more information
